Payment to MSME in Section 43B(h) Income Tax Certain deductions to be only on actual payment
Introduction: The recent amendment to the Income Tax Act has introduced a significant change to Section 43B, specifically targeting Micro and Small Enterprises (MSMEs). The objective is to ensure timely payments to MSMEs, and non-compliance can have a substantial impact on a business person’s income tax liability.
इस provision के अनुसार
अगर assessee ने section 15 of the Micro, Small and Medium Enterprises Development Act, 2006 में बताये गए time limit के बाद MSME को payment किया है, तो assessee को उस payment की deduction actual payment करने पर ही मिलेगी. और यह section micro or small enterprise को cover करता है Medium Enterprises के payment पर यह section applicable नहीं है. यह section 1 अप्रैल 2023 से लागु है.
यहाँ ध्यान देने योग्य बात यह है ही सामान्यतः 43B के अंतर्गत यदि payment return filling की due date [ U/s139(1)] पर या उसके पहले कर दिए जाते है तो वह उसी year में Allow हो जाते है पर यह condition इस section पर applicable नहीं है. जिसका मतलब यदि due date पर payment नहीं किया गया तो वह जिस year में pay किये जायेंगे उस year में deduction के लिए eligible होंगे.
अब हम section 15 of the Micro, Small and Medium Enterprises Development Act, 2006 को समझते है.
MSME ACT Section 15
“Where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day:
Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed forty-five days from the day of acceptance or the day of deemed acceptance.”
यदि assesee ने Micro, Small Enterprises से goods या services purchase की है तो MSME के section 15 में Specified Time Limit (15 दिन या 45 दिन, जो भी period applicable है ) के अन्दर payment किया जाना चाहिए तभी वह इनकम टैक्स में allow किया जायेगा.
और यदि due date पर payment नहीं किया गया तो वह जिस year में pay किये जायंगे उस Year में deduction के लिए eligible होंगे.
Specified Time Limit:
इस section के लिए Specified Time Limit इस बात पर निर्भर करती है की आपका Micro या Small enterprises के साथ Written Agreement है या नहीं.
यहाँ “date of acceptance” और “appointment date” important है अब हम वह जानते है
Day of acceptance या day of deemed acceptance से क्या मतलब है:-
MSMED Act, 2006, के Section 2 में day of acceptance or the day of deemed acceptance को किया गया है:
(a) the day of the actual delivery of goods or the rendering of services; or
(b) where any objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services, the day on which such objection is removed by the supplier;
Further, the day of deemed acceptance means where no objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services, the day of the actual delivery of goods or the rendering of services.
Crux
यहाँ invoice की date important नहीं है यहाँ actual delivery या rendering of services से Time limit की due date को calculate करना होगा.
और यदि Good या services के लिए objection raise किया जाता है तो वह objection जब दूर किया जायेगा वहाँ से Time limit calculate करेंगे.
अब हम Appointed day को समझते है
“Appointed day’ means day following immediately after the expiry of the period of fifteen days from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier.”
Example:
No Agreement Cases
| Date of Invoice | Date of Delivery of Goods/ Rendering of Service | Appointed Day (Due Date as per MSME Act) | Date of Payment | F.Y. in Deduction Allowed | Remark |
| 02/03/2024 | 02/03/2024 | 17/03/2024 | 25/03/2024 | 2023-24 | Here it was paid after due date as per MSME act but paid in same FY so eligible for deduction in same FY 2023-24) |
| 03/03/2024 | 03/03/2024 | 18/03/2024 | 03/04/2024 | 2024-25 | paid after appointed day then allowed as deduction in year of payment ie. Deduction Allowed in FY 2024-25 as paid in FY 2024-25 |
| 05/03/2024 | 18/03/2024 | 02/04/2024 | 01/04/2024 | 2023-24 | Deduction in FY 2023-24 as it was paid before Appointed day |
| 05/03/2024 | 18/03/2024 | 02/04/2024 | 02/04/2024 | 2024-25 | Deduction Allowed in FY 2024-25 as it was paid on Appointed day as if no agreements then payment to be made “before the appointed day” so if paid on or after 02/04/24 allowed in FY 24-25) |
if Written Agreement Exists
Date of Invoice |
Date of Delivery of Goods /Rendering of Service |
Agre-ement Days |
Due Date as Agreement |
Due Date as per MSME Act |
Payment Date |
Deduction Allowed in F.Y. |
Remark |
03/03/2024 |
03/03/2024 |
15 |
18/03/2024 |
18/03/2024 |
28/03/2024 |
2023-24 |
Paid Within FY |
03/03/2024 |
03/03/2024 |
15 |
18/03/2024 |
18/03/2024 |
06/04/2024 |
2024-25 |
Paid in Next FY and after Due Date as per MSME Act |
06/03/2024 |
18/03/2024 |
15 |
02/04/2024 |
02/04/2024 |
02/04/2024 |
2023-24 |
Paid in Next FY but Within Due Date as per MSME Act |
06/03/2024 |
18/03/2024 |
15 |
02/04/2024 |
02/04/2024 |
04/04/2024 |
2024-25 |
Deduction Allowed in FY 2024-25 as it was paid in next FY and after the due date as per MSME Act |
18/03/2024 |
20/03/2024 |
15 |
04/04/2024 |
04/04/2024 |
03/04/2024 |
2023-24 |
it was paid on or before the due date as per MSM E so eligible for deduction in FY 23-24 |
18/03/2024 |
20/03/2024 |
15 |
04/04/2024 |
04/04/2024 |
07/04/2024 |
2024-25 |
Here it was paid after the due date as per MSM E so eligible for deduction in FY 24-25 |
03/02/2024 |
03/02/2024 |
60 |
03/04/2024 |
19/03/2024 |
25/03/2024 |
2023-24 |
Deduction Allowed in FY 2023-24 as it was paid in same FY {MSME maximum 45 days for agreement) |
03/02/2024 |
03/02/2024 |
60 |
03/04/2024 |
19/03/2024 |
02/04/2024 |
2024-25 |
Deduction Allowed in FY 2024-25 as it was paid in next FY {MSME maximum 45 days for agreement) |
03/02/2024 |
20/02/2024 |
60 |
20/04/2024 |
05/04/2024 |
05/04/2024 |
2023-24 |
Deduction Allowed in FY 2023-24 as it was paid on or before date agreed upon as per MSME Act |
03/02/2024 |
20/02/2024 |
60 |
20/04/2024 |
05/04/2024 |
08/04/2024 |
2024-25 |
Deduction Allowed in FY 2024-25 as it was paid in next FY and that also after the due date as per MSME act |
Frequently asked questions [FAQ]
- क्या invoice को written agreement माना जा सकता है?
Invoice को written agreement माना जा सकता है या नहीं यह invoice में disclosed fact पर निर्भर करेगा. सामान्यत Invoice एक One-Side document होता है जो seller के द्वारा issue किया जाता है. “written agreement” को इस एक्ट में define नहीं किया गया है, इसे अब हम discuss करते है
- एक agreement के लिए “An offer made by one person and accepted by another must be accepted by all parties involved.”
- This written agreement can be a separate document, purchase order, or even the invoice itself, as long as it clearly specifies the credit period and is signed by both parties.
एक Invoice को Agreement के रूप Establishing किया जा सकता है यदि उसमे ये contain शामिल हो –
- While an invoice alone may not be sufficient as a formal written agreement, it can serve as evidence of the terms agreed upon if it includes:
- Clear statement of credit period: This should be explicitly mentioned, indicating the number of days from the invoice date or delivery date within which the payment is due.
- Signatures of both parties: The buyer and seller’s signatures on the invoice can add weight to its validity as evidence of the agreement.
- Additional terms: If the invoice includes other relevant terms like late payment penalties or dispute resolution mechanisms, it strengthens its role as a potential agreement.
Invoice को Agreement prove करने में क्या Limitations हो सकती है जिन्हें challenge किया जा सकता है ?
- Invoices are primarily meant for recording the details of a transaction, not necessarily serving as formal legal agreements.
- The enforceability of an invoice as an agreement can be challenged in court if its terms are unclear, ambiguous, or lack proper signatures.
- It’s always advisable to have a separate written agreement, especially for complex transactions or involving significant amounts.
Alternatives to Invoice for Written Agreement: यहाँ dispute को avoid करने के के लिए in additional document भी prepare कर लेने चाहिए
- Formal Contract: This is the most comprehensive and legally binding option, outlining all aspects of the agreement, including payment terms, warranties, dispute resolution, etc.
- Purchase Order: This document issued by the buyer specifies the goods or services ordered, price, delivery schedule, and payment terms. Both parties can sign it to create a binding agreement.
- Letter of Agreement: This is a less formal document than a contract but can still be effective in outlining the key terms of the agreement, including payment terms
एक Invoice को अकेले ही full-fledged written agreement नहीं माना जा सकता है, लेकिन invoice एक crucial role निभा सकता है यदि उस पर स्पष्ट रूप से credit period लिखा गया है, साथ ही दोनों party द्वारा signed किया गया हो, साथ ही dispute को resolve करने के सन्दर्भ में बताया गया हो लेकिन Formal contract, purchase order, or letter of agreement आदि additional document हमेशा advisable है.
- क्या यदि कोई Assesee Presumptive Taxation [44AD/44ADA etc.] में income Declare करता है तो उस पर भी यह section apply होगा?
- Panaji Tribunal in case of Good Luck Kinetic v. ITO (2015) के Case में कहा गया कि:
Section 43B की start एक “non obstante clause” के रूप में होती है “Notwithstanding anything contained in any other provision of this act…” जिसका मतलब की section 43B का overriding effect over है जिसमे all other provision of the act जिसमे section 44AD, 44ADA & 44AE भी शामिल है
जबकि 44AD, 44ADA & 44AE का overriding effect of section केवल section 28 to 43C तक शामिल है जिसका मतलब section 43B का large overriding effect है, क्योंकि यह other provisions of the act को भी override करता है. साथ ही Section 43B को जब Finance Act, 1983 में inserted किया गया था तब Memorandum में इसके सन्दर्भ में explain किया गया था कि इस section का object “to curb the practice of not discharging statutory liabilities for a longer period” है,
जबकि presumptive taxation provisions को small businesses को help के लिए introduced किया गया है. जिससे small businesses को taxation comply करने से relax किया जा सके और compliance costs और administrative burden से राहत दी जा सके.
इस आधार पर हमारे opinion में disallowance u/s 43B, section 44AD, 44ADA & 44AE के लिए computing income के लिए attract करेगा.
- Any Sum Payable में क्या शामिल होगा?
Any Sum में Trade payable For capital goods, Inventory या expenses payable सभी payable शामिल होंगे.
Conclusion: In conclusion, the amendment to Section 43B brings forth a crucial change impacting MSME payments. Timely payment to MSMEs is now a critical factor in claiming deductions, and businesses need to align their practices accordingly. The detailed analysis provides insights into the intricacies of the amended provision and its implications for businesses. It’s essential for taxpayers to stay informed and compliant to navigate these changes effectively.
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